The latest Herman Trend Report from consulting firm The Herman Group asks:

Money is King in 2010 and Beyond?

The recent prolonged economic downturn has shifted consumer values -- for both external and internal customers. In a drastic change from its 2008 findings,, Colloquy's 2010 Retail Loyalty Index found that low prices have replaced customer service as the top driver of customer loyalty.

Not surprisingly, lowest-priced Walmart emerged as the dominant retailer in many categories. Costco, known for great service and the dominant 2008-index retailer, had the highest customer loyalty ratings in three out of five of the Mass Merchant regional categories.

Low prices are great, but over time, can they really beat good old-fashioned customer service?

Today's Tip of the Day from Harvard Business Review offers advice about how to better understand your customers.

Use the 3 Minute Rule to Better Understand Your Customer

Surveys and focus groups can tell you a lot about your customers. But there are indirect analyses that can be equally revealing. Try using the three-minute rule to better understand the broader context in which your customers use and interact with your products and services.

Ask what your customer is doing in the three minutes immediately before and after using your product.

By doing this, you may discover an unnecessary complexity they have to overcome. Or you may identify a cross-selling opportunity if they interact with another product or service right before interacting with yours.

This rule is a great way to see the big picture and identify adjacent opportunities.

1. Did you shine that doorknob? Research shows that customers remember the first and last minutes of a service encounter much more vividly -- and for much longer -- than all the rest of it.

2. Set your clocks forward: Modern customers expect speedier service than did any generation before them. A perfect product delivered late equals a defective product.

3. Customers want to connect with a real person-online or off. For example, instead of a web-based chat window that blandly announces "you are now chatting with Jane," try "you are now chatting with Jane Yang-Katzenberg."

4. Remember each returning customer. Whatever your business-and no matter how large, work to achieve the computer-assisted effectiveness of a beloved bartender, doorman or hairstylist, the kind who would know Bob's preferences, the name of Bob's pet, when Bob was there last, for example. Superb client tracking systems can create the same "at home" feeling in your customers.

5. Anticipate a customer's wishes. When a customer's wish is met before the wish has been expressed, it send the message that you care about the customer as an individual.

6. Don't leave the language your team uses up to chance. Develop and rehearse a list of vocabulary words and expressions that fit your business brand perfectly.

7. Be patient when filling positions. In a superb service organization, a single disagreeable or unresponsive team member can erode customer loyalty.

Use Words, Not Numbers to Understand Your Customers...that's the tip of the day from Harvard Business Publishing today.

When it comes to customer data, many believe that multiple-choice surveys across large samples that can be statistically analyzed yield the most rigorous research. This type of analysis, however, only gives you a shallow understanding of your customers. To get more nuance, use qualitative methods to discover what your customers think about your products and services. Qualitative techniques, such as focus groups or open-ended questionnaires, let you delve deeper into the relationship between your firm and those who buy or use your products. They also allow customers to express their opinions using their own words, not yours.

The Corporate Executive Board revealed recent research that challenges conventional customer service wisdom. According to CEB, it doesn't pay to delight a customer.

After years of focus on the "above and beyond" service mentality, research from the Customer Contact Council, a division of CEB, indicates that most customers only seek a satisfactory solution to an issue, and that companies themselves are actually artificially raising expectations in their efforts to over-satisfy them. The research also suggests, and CEB advises, that reducing the level of effort a customer exerts in the service channel is a more effective and lucrative path to customer loyalty.

In fact, 96 percent of customers who put forth high effort to resolve their issues are more disloyal -- an eye-opening number when companies consider that 59 percent of customers report moderate-to-high perceived additional effort in a service interaction.

CEB's research found that in aggregate, customer service interactions are nearly four times more likely to lead to disloyalty than loyalty. For companies seeking to mitigate disloyalty, reducing customer effort -- not delighting the customer is the greatest lever the contact center can pull.

I'm not quite sure what "customer effort" means.In any case, customer service interactions are nearly four times more likely to lead to disloyalty than loyalty: Couldn't that be because customer service is so lousy at most places?